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The financial independence coefficient characterizes. Financial stability ratios

1. Coefficient of financial autonomy (independence) (Kavt):

Kavt = Ksob/BP,

where Ksob is the amount of equity capital, BP is the balance sheet currency for liabilities - all sources of financing.

This ratio is also called the capital concentration ratio. This is the most general indicator of financial stability, showing the share of equity capital in all sources of financing. The higher this share, the more stable the financial condition of the enterprise.

It is widely believed that the share of equity capital should be quite large - no less than 60%, or at least no less than 50%. That is, the coefficient value should be 0.5 or 0.6. These recommended values are quite reasonable. In this case, the risk of creditors is reduced: by selling half of the assets created using its own funds, the organization will be able to repay its debt obligations. However, the conditionality of this limit is obvious: for example, a highly profitable enterprise or an enterprise with a high turnover of working capital can afford a higher level of debt capital.

If we consider the values of this indicator from within the organization, then, indeed, its growth means an increase in financial stability and independence from creditors. If we consider the value of this coefficient from the outside, from the position of creditors, then it shows to what extent creditors are protected by the level of coverage of all sources by their own capital, and to what extent they trust their borrowers. For example, there is evidence that in Japan a level of financial independence of 0.2 can be considered normal. That is, the mentality factor has a direct and very significant impact on one of the most important financial ratios.

If the denominator of this ratio uses the amount of assets instead of the sum of liabilities, then with the same numerical value it will acquire a different value. The ratio of equity capital to the amount of assets turns it into autonomy coefficient , since it shows how many assets are per 1 ruble. own capital.

2. Financial dependence coefficient (Kfz):

Kfz = Kz/Bp,

where: Кз – amount of borrowed capital

This ratio shows the share of borrowed capital in the structure of financing sources.

3.Financial stability coefficient (CF)

Kfu = Ksob/BP

4. Financing ratio (financial risk (CFR)):

Kfr = Kz/Ksob

The ratio shows the ratio of borrowed and own sources of financing. The more the ratio exceeds one, the greater the enterprise's dependence on borrowed funds. The acceptable level of dependence is determined by the operating conditions of each enterprise, primarily, the rate of turnover of working capital or current assets (TA). In addition, when assessing the normal level of this ratio for an organization, it is necessary to compare it with the ratio of inventory coverage with its own working capital. If the latter is high, that is, inventories are covered mainly by own sources, then borrowed funds cover mainly accounts receivable. The condition for reducing the share of accounts payable in this case is the acceleration of the return of accounts receivable.

Since this section of the analysis focuses most on long-term liabilities, this ratio can be calculated as:

Kfr = DO/Ksob

4. Coefficient of long-term financial independence (financial stability) (Kdfn):

Kdfn = Ksob + DO/BP

The ratio shows what part of the total value of the enterprise's assets is formed from the most reliable sources of financing, that is, does not depend on short-term borrowed funds. Essentially, this is a refined autonomy coefficient. If the company's liabilities include long-term obligations, it is advisable to use this coefficient instead of the autonomy coefficient. One of the recommended values of this coefficient is 0.9, the critical value is 0.75.

A variation of this coefficient is coefficients of long-term financial dependence and coefficients of long-term financial independence , calculated on the basis of only constant capital without the use of short-term liabilities.

Kfz = DO/Kpost,

where: DO – long-term obligations;

Kpost – constant capital; Kpost = Ksob + DO

Kfu = Ksob/Kpost

The coefficients of financial stability and financial dependence, calculated on the basis of constant capital, add up to 1. Focusing only on the factors of stability and financial independence, the organization should strive to increase financial stability and reduce financial dependence. If we focus on the factors of financial and general economic efficiency and also take into account the positive role of borrowed capital in this process, then an unambiguous conclusion will be impossible. Here one of the most important and most difficult tasks of financial management is very precisely manifested - in the process of managing the capital of an organization, to find and maintain such proportions that allow you to obtain maximum profits at an optimal level of risk. For this purpose, a large number of risk coefficients are calculated.

The autonomy coefficient is an important indicator of the success of any enterprise. It refers to financial stability ratios. This technique allows you to evaluate the activities of an organization in the long term and, based on the data obtained, improve their condition in the planning period.

general characteristics

The autonomy coefficient is an indicator of the degree of freedom of an enterprise from borrowed capital. It reflects part of own liabilities in the structure of the balance sheet currency. An enterprise, of course, can use borrowed funds to increase its profits. However, the payment for the use of investors' capital should not exceed the expected profit.

The low value of this indicator indicates the rather low attractiveness of the company's activities for new creditors.

The autonomy coefficient is used by arbitration managers when analyzing the activities of an enterprise. Therefore, financial management within the company should also rely on the data from the presented assessment methodology.

In the literature you can find many names for this indicator. This should not confuse the analyst, since the essence of the coefficient remains the same, regardless of its name.

Calculation formula

The generally accepted formula for determining this indicator is as follows:

KA = Own sources/Balance currency

If we rely on the data in Form No. 1 of the accounting report, then the autonomy coefficient, the formula of which was presented above, will have the following interpretation.

KA = s. 1300/s. 1600.

In financial international sources and educational literature you can find this type of formula:

EtTA = EC/TA, where EU is Equity Capital; TA - Total Assets.

Normative value

In our country, the coefficient of financial autonomy has its normative significance. This ratio should be equal to 0.5. Financial analysts believe that its optimal value is higher - 0.6-0.7.

This indicator depends on the type and direction of the company’s economic activity, as well as the country of its operation. The figure may be a little less. For example, for the USA, the optimal value of the autonomy coefficient is 0.5, and for South Korea - 0.3. To be able to draw adequate conclusions, the presented indicator should be compared with its value among other enterprises in the industry. The standard value is only recommended; the decision is made in each specific case individually.

Example of calculation and analysis

In order to better understand the essence of such a criterion of a company’s activity as the autonomy coefficient, we should consider an example of its calculation at an enterprise.

Let's say the company had the amount of its own resources in the reporting period at the end of each quarter:

1 sq. - 1.876 million rubles;

2 sq. - 1.91 million rubles;

3Q. - 1.82 million rubles;

4 sq. - 1.928 million rubles.

The balance sheet currency at the end of each quarter was:

1 sq. - 3.961 million rubles;

2 sq. - 3.999 million rubles;

3Q. - 3.913 million rubles;

4 sq. - 3.88 million rubles.

The coefficient calculated for each quarter will be as follows:

K1 = 1.876/3.961 = 0.47;

K2 = 1.91/3.999 = 0.47;

K3 = 1.82/3.913 = 0.46;

K4 = 1.928/3.88 = 0.5.

The results of the analysis demonstrated that the company did not have significant changes in the aspect of the considered indicator in the reporting period, which indicates the structure of its financial condition and the harmonious management of the capital structure by the management of the enterprise. Minor changes in the amount of own liabilities are a result of the normal operating activities of the organization. The balance sheet currency did not increase by attracting innovative capital.

Having familiarized yourself with such an indicator as the autonomy coefficient, you can analyze the capital structure of the enterprise and draw conclusions about the financial stability of the object under study.

The autonomy ratio is a convenient and effective indicator of the financial stability of a company. It is calculated as the ratio of equity capital to business assets, based on the balance sheet information (Form No. 1). The meaning of Equity to Total Assets is of interest to partners, creditors, investors, and owners. Its standard value is from 0.5. If the indicator approaches one, then the company is stable, but does not use debt financing enough, which hinders its growth.

Lenders are willing to cooperate with companies that are able to repay their financial obligations on time. Therefore, they assess in advance whether the company is able to cover its obligations with its own capital and reserves. This criterion also characterizes the financial stability of the business.

Autonomy coefficient(Equity to Total Assets - EQ/TA, KA) or indicator of financial independence is a relative financial indicator that allows you to determine the degree of dependence of a company on debt financing, as well as its ability to repay obligations using its own funds.

Reference! CA is used in the practice of arbitration managers, who are obliged to establish the financial condition of the company before starting bankruptcy proceedings in relation to it (Resolution of the Government of the Russian Federation of June 25, 2003 No. 367 “On approval of the rules for conducting financial analysis by an arbitration manager”).

Analysts use the financial independence ratio to assess the financial strength of a business and assess the likelihood of its bankruptcy.

Reference! The inverse of the autonomy indicator is the financial dependence coefficient, and its analogue is the bankruptcy forecast coefficient.

The reduction in Equity to Total Assets is the first sign that the company requires checking for the likelihood of bankruptcy (bankruptcy forecast coefficient, capitalization ratio, etc.). If this trend is prolonged, then investors and business lenders should consider their injections.

Formula for calculating the autonomy coefficient

The current value of the EQ/TA indicator can be determined on the basis of information from reporting form No. 1 - the balance sheet. To do this, you need to take information from it:

Total assets (p. 1300).
Total equity capital and reserves (p. 1700).

Important point! When calculating the KA indicator, all assets are taken into account, regardless of their degree of liquidity.

The theory of financial analysis uses the following formula for determining EQ/TA:

KA = SK/SA, where:

CA - total assets;

SK - equity capital and reserve reserves.

In the practice of Russian companies, the above formula is expressed through the lines of the balance sheet (form No. 1):

KA = page 1300 / page 1700

Important point! If you add long-term liabilities to equity when calculating, you get a financial stability ratio.

Standard indicator value

The Equity to Total Assets indicator can be applied to organizations of any sector of the economy, any scale of activity and form of ownership. Its normative meaning is also universal and uniform for all business entities.

Important point! When conducting detailed financial analysis, they compare the obtained value with the average indicators in the selected sector of the economy.

When analyzing the indicator, it is important to take into account some assumptions:

the higher the value of the financial autonomy indicator, the more stable the position of the enterprise seems;
if the autonomy coefficient is close to 1, then it is believed that business development is hampered by insufficient use of debt financing.

Examples of coefficient calculation

The calculation and analysis of the EQ/TA indicator is most conveniently presented using the example of specific Russian companies. The objects of study were selected:

oil company PJSC Bashneft;
one of the leaders in online retail trade, NEPAO Yulmart.

Conclusion! An analysis of the financial independence of PJSC Bashneft showed that in 2015-2017. the company is becoming increasingly dependent on debt sources of financing. In 2017, the indicator falls below the normative limit. This state of affairs is due to the reorganization of the oil giant in 2015, which led to a gradual reduction in the amount of equity capital.

Conclusion! The Yulmart company's degree of independence from external sources of financing is growing due to the fact that, in conditions of an unstable macroeconomic situation and the volatility of the ruble exchange rate, it decided to follow the strategy of using its own sources of financing its activities.

The overall result of the analysis: the position of the Yulmart trading company in 2017 is more stable than that of the oil giant Bashneft. The sample shows an algorithm for using the autonomy coefficient formula in the Excel spreadsheet editor.

Financial independence is one in which you no longer need to work for money (for your uncle), since now you have at your disposal a sufficient number of assets that can work without your direct participation and bring you the amount of money that you can use to live the end of your life comfortably and fulfill all your cherished desires.

Financial independence is passive income, the size of which makes it possible not to think about money. This is a level of passive income that covers absolutely any of our expenses for a certain period of time.

Financial independence (of a company) is a certain state of the company’s accounts that guarantee its constant solvency.

Financial Independence Ratio

The most important indicator characterizing the financial stability of an enterprise is the share of equity capital in the total amount of economic assets. This indicator is called the coefficient of concentration of equity capital (or otherwise the coefficient of autonomy or the coefficient of financial independence).

The financial independence coefficient is calculated using the following formula:

Autonomy coefficient = equity capital (total of the first liability section of the balance sheet “Capital and reserves”) / currency (total total) of the balance sheet.

The value of this indicator determines how independent the organization is from attracting capital owned by other organizations. The greater the share of equity capital (own funds), the more stable the organization’s activities are.

The value of the coefficient under consideration must be at least 0.5.

Consider the following indicator - the coefficient of financial dependence, which is essentially the inverse of the previous indicator and is determined by the following formula:

Currency (total total) of the balance sheet / equity capital (total of the first liability section of the balance sheet “Capital and reserves”).

The growth of this indicator in dynamics means an increase in the share of borrowed sources of funds in the financing of a given enterprise. If the value of this coefficient decreases to one, this means that the organization is fully financed from its own sources of funds.

Financial independence of the enterprise

The system of a company's financial resources is studied through a dynamic analysis of coefficients characterizing such categories as: the financial independence of the enterprise, the degree of protection of creditor interests in long-term investments in the company.

In turn, the financial independence of an enterprise is a certain state of the balance sheet (budget, accounts) of the company, guaranteeing its constant solvency, regardless of external (borrowed) funds.

The main indicators here are the coefficients:

Autonomy, which characterizes the share of the company’s equity capital in its financial resources. Determines the degree of independence of the company from borrowed funds. Optimal value >0.5;
. Its value should be reflecting the level of capital created in the process of business activities. Its growth should be observed. The growth rate of this coefficient determines the expected rate of loan growth, provided that the risk does not increase;
immobilization of long-term debt, detailing the system of financial resources in aspects of the long-term nature of formation. (Indicator of capital (equity) maneuverability, showing what part of the capital finances current activities. (>0.3);
covering interest payments, reflecting the relative profitability of loans. Shows how many units of profit per unit of cost to raise funds;
dividend load, characterizing the dividend policy of the enterprise, determining the actual amount of dividends per 1 rub. funds invested by shareholders.

It should be noted: there are no uniform strict standards for the above coefficients, which, by and large, determine the financial independence of an enterprise.

Their values depend on many conditions:

Industry affiliation of the company,
lending principles,
turnover of funds;
accounting policy.

Therefore, the acceptability of these coefficients and the assessment of dynamics can only be established using spatio-temporal comparisons with similar enterprises. The next way to determine the financial independence of an enterprise is to analyze its property status.

In fact, capital is the only type of company resource that can be directly transformed into any other type of resource in the shortest possible time.

Capital actually exists, turning into capital goods:

Means of production,
workforce,
money,
time.

Capital goods reflected in the assets of a company's balance sheet determine its property position.

The analysis of the company’s property is carried out in two directions:

Internal: according to the contents of the articles, based on the data of working capital standards, notes, payment schedule;
external: based on the growth (dynamics) of active articles.

Analysis of such an indicator as the financial independence of an enterprise is necessary to determine the real financial position of the company, the degree of influence of borrowed funds on it, the possibility of existence without external cash flows (credits, loans, investments).

It is worth noting that the financial independence of an enterprise ensures its stability and economic freedom.

While a large share of third-party funds used by the company, on the contrary, makes the enterprise financially and strategically dependent (many actions must be approved by creditors and investors). Otherwise, this threatens an early withdrawal of investments and the need to repay loans in a short time.

Autonomy financial independence coefficient

The autonomy coefficient (financial independence coefficient) characterizes the ratio of equity capital to the total amount of capital (assets) of the organization. The ratio shows how independent the organization is from creditors. The lower the value of the coefficient, the more dependent the organization is on borrowed sources of financing, the less stable its financial position.

Calculation (formula)

Autonomy ratio = Equity / Assets

Both the numerator and the denominator of the formula are reflected in the organization’s balance sheet, where the value of assets is always equal to the sum of the organization’s own and borrowed capital.

Normal value

The generally accepted normal value of the autonomy coefficient in Russian practice is 0.5 or more (optimal 0.6-0.7). In world practice, up to 30-40% of equity capital is considered the minimum acceptable. But in any case, this indicator strongly depends on the industry, or more precisely on the ratio in the structure of the organization of non-current and current assets. The greater the share of non-current assets of an organization (capital-intensive production), the more long-term sources are required to finance them, which means that the greater the share of equity capital should be (the higher the autonomy coefficient). An increase in the autonomy ratio indicates that the organization is increasingly relying on its own sources of financing.

In world practice, the more common is the financial dependence ratio (debt ratio), which is the opposite in meaning to the autonomy ratio, but also characterizes the ratio of equity and borrowed capital. Another similar indicator used in Western practice is the debt to equity ratio.

Financial independence of the organization

Financial independence is a certain state of the company’s accounts that guarantee its constant solvency.

Analysis of financial independence for a particular date allows us to answer the question: how correctly the organization managed financial resources during the period preceding this date. The essence of financial independence is determined by the effective formation, distribution and use of financial resources. An important indicator that characterizes the financial condition of an enterprise and its independence is the provision of material working capital from its own sources, i.e. financial independence is the provision of reserves with sources of their formation, and solvency is its external manifestation. What is important is not only the ability of an enterprise to repay borrowed funds, but also its financial stability, i.e. financial independence of the enterprise, the ability to maneuver its own funds, sufficient financial security for the uninterrupted process of activity.

The objectives of analyzing the financial stability of an enterprise is to assess the size and structure of assets and liabilities - this is necessary in order to find out:

A) how independent the enterprise is from a financial point of view;
b) the level of this independence is increasing or decreasing and whether the state of assets and liabilities meets the objectives of the financial and economic activities of the enterprise.

Financial independence is characterized by a system of absolute and relative indicators. Absolute ones are used to characterize the financial situation arising within one enterprise. Relative - to characterize the financial situation in the economy, they are called financial ratios.

The most general indicator of financial independence is the surplus or lack of a source of funds for the formation of reserves. The point of analyzing financial independence using an absolute indicator is to check which sources of funds and in what amount are used to cover reserves.

The structure of an enterprise's financial resources is studied using a dynamic analysis of coefficients that characterize, on the one hand, the level of financial independence of the enterprise, and, on the other hand, the degree of protection of the interests of creditors who have made long-term investments in the enterprise.

Financial Independence Plan

First stage. Financial security plan. If you do not have 6 monthly salaries in your account, then you do not have the right to exist on this Earth (maybe a little arrogant statement, but it contains what every self-respecting person should have). You simply must have a financial reserve of money for the next 6 months.

Let's say you receive $500 a month, then the formula for financial security will look like this: $500 x 6 = $3,000

This means that if you don’t have $3,000, then you simply cannot spend until you earn it.

Second stage. Financial security plan. Now multiply your monthly salary (for us it’s $500) by 150. This will be your “goose” from which you can earn interest. $500 x 150 = $75,000

If you put $75,000 in the bank at 8% per annum, you get $6,000 per year = $500 per month. When you implement a financial security plan, it will mean that you can theoretically no longer work. Your “goose” will give you the same $500 per month ($75,000 deposited in the bank at 8% per annum).

If you wish, you can work, but you will not have to do this, since you will receive each month an amount similar to your monthly salary.

Third stage. Financial Freedom Plan! This is what all people without exception should strive for. Think about writing down on a piece of paper how much money per month do you need to be happy?

For me, for example, this is $20,000. Now we proceed according to our usual plan: $20,000 x 150 = $3,000,000 You need $3,000,000 in order to become financially free! Now you can rightfully consider that life is good.

Now you can walk around and say, “I’m rich!” But don't do it too arrogantly. Just enjoy life to your heart's content, you deserve it.

Tip four. Create multiple sources of income. Always strive to have many streams of income. Even if some dry up, others will regularly bring you income.

Here are just a few ideas where you can get these “streams”: renting out real estate, a patent for something (invention, song, etc.), selling your own book, business income, etc.

Indicators of financial independence

What does the term financial independence mean to you? Have you thought about this question for yourself, if not, then think about it. After all, your perception of this phrase directly determines whether you will achieve this very independence, and if so, then in what way.

For each of us, indicators of financial independence are presented in a different light. For example, for some it is an opportunity not to work, for others it is a secure old age, for others it is a life free from any obligations, and for others it is presented as an opportunity to accumulate certain assets in order not only to provide for themselves, but also to engage in charity and certain donations .

But, despite such a varied perception of this term, most of us would still agree that financial independence is a unique component of human happiness, which we need almost every day, and especially the female half of humanity.

Every second woman is familiar with the feeling of constant lack of money, refusal of desired or necessary things, inability to go on vacation, and so on. And here they should think, it’s probably time to change something in their life.

Start with yourself, start changing your attitudes and attitude towards life, tune your consciousness to properly manage the energy of well-being. After all, attracting wealth into your life and becoming a financially independent member of society is quite realistic and within the power of every woman. The world is so filled with money that there is enough for everyone. A woman needs to understand and reinforce in her subconscious that money is needed primarily in order to invest it in herself: to get an education, to increase her own self-esteem.

Watch your statements about money, give them positive definitions more often (money is money, money brings stability, money gives freedom) and try to avoid negative phrases like: my finances sing romances, there’s always not enough money, money doesn’t buy happiness and other similar things statements.

A woman’s financial independence is, first of all, the successful future of her children, which is an important motivating factor in order to begin to change her usual views and foundations. Answer the questions for yourself: are you ready to start making money and what is stopping you from doing this? Don’t be surprised, but the answers can be quite ambiguous: it could be a reluctance to work and act, a lack of certain knowledge, an inability to value money, or a complete lack of entrepreneurship. You shouldn’t hide behind your lack of money as a virtue. After all, life attitudes are not taken out of thin air, but directly from your environment.

Do some research:

Review your circle of friends.
Choose among them five people with whom you communicate the most and most often.
Calculate their income level and divide by 5.
This is your future income five years from now.

If the figure impresses you, you are on the right track, and if not, then expand your circle of contacts, try more to communicate with wealthy and financially independent people, because their way of thinking and behavior will help you build the right attitude towards life and money. Learn to resist negative factors, stop any complaints about the lack or lack of money. This way you will protect your information field. Remember that there is no shame in being rich, you need to learn how to give and ask for money in such a way that you always feel on top and be in the black. All rich people are good at numbers.

Learn to have a correct and positive attitude towards your money, and your plans and dreams can become a reality in the near future.

Explanation of the indicator

The indicator of financial autonomy is one of the most important coefficients of financial stability. It is equal to the ratio of the company's equity capital to all financial resources. The value of the indicator indicates what part of its assets the company is able to finance from its own financial resources. For example, if the ratio is 0.48, this means that the company is able to finance 48% of its assets with its own capital.

This indicator is important for both the owners and creditors of the company. A low value of the indicator will signal a high level of risks and low stability of the company in the medium term. For example, if a company is able to generate profits and is solvent in current conditions, this does not mean that the company will be able to operate stably when the market situation changes. A low share of equity capital is usually accompanied by significant financial costs (interest payments, other costs of attracting and using borrowed funds). Therefore, a change in the market situation may lead to a situation where the amount of operating expenses and financial expenses will exceed the company’s financial result. The long-term influence of such a factor will certainly lead to bankruptcy.

The owners are also concerned about the prospects for the company's operation in the next 3-10 years. However, they are also interested in another aspect, which shows the coefficient of financial autonomy. A low share of equity capital with high profitability will indicate the efficient use of the owners' funds and their high profitability. For example, if a company uses 100 thousand rubles. owners, then it can produce and sell 100 units of goods and make a profit of 20 thousand rubles, and when attracting an additional 100 thousand rubles. borrowed funds, will be able to produce and sell 200 units of goods and make a profit of 50 thousand rubles. taking into account financial costs. In the first case, the return on capital of the owners was only 20% per annum, and in the second - 50% per annum.

The company's management needs to find a middle ground between ensuring the interests of the owners and ensuring the financial stability of the company.

Standard value:

As mentioned, the company has various goals - both to generate profit and to remain stable in the medium and long term. Therefore, the standard value of the indicator is in the range of 0.4 – 0.6. A lower value may indicate a high level of financial risks. A financial autonomy indicator value above 0.6 will indicate that the company is not using its full potential.

When analyzing financial autonomy, you can compare the indicator with competitors (of the same size). The standard value will differ for different industries. For example, for commercial banks the typical value is 0.05 or less. For new companies that have not yet established themselves in the market, the share of equity capital will be high.

A negative value of the indicator indicates imminent bankruptcy and actions to restore financial stability must be taken immediately.

Rosselkhozbank offers the following standard values:

Table 1. Standard value of financial autonomy by field of activity

Source: Vasina N.V. Modeling the financial condition of agricultural organizations when assessing their creditworthiness: Monograph. Omsk: Publishing House NOU VPO OmGA, 2012. p. 49.

Directions for solving the problem of finding an indicator outside the standard limits

If the value of the financial autonomy indicator is too high, and there is potential for company growth, increasing market share, increasing sales volume, increasing operational efficiency by attracting additional funds, then it is advisable to attract additional borrowed funds. Calculating the effect of financial leverage will allow you to get an unambiguous answer about the advisability of such actions.

If the value of financial autonomy is below the standard value, then it is necessary to work towards increasing the value of the indicator. If solvency has already been impaired, then a desirable measure is to invest additional funds by the owners or attract a third-party investor. If the company’s liquidity is normal and it is able to balance input and output cash flows, then measures to improve the company’s stability may not be urgent. To do this, the company can, for example, reinvest the profits over the next few years.